I'm angry that AIG handed out more than $200 million in bonuses.  Despite being on the brink of collapse and needing billions in federal aid, the company managed to find money to give bonuses, including some as large as $4 million.  This should have never happened, but it did.  Before AIG or any other company accepted funds from TARP or any other federal funds, it should have been required to end all bonus payments, along with all other unnecessary spending (ex. corporate jets). 

     Now that the government realizes it made some mistakes, it is using draconian measures to aid in their grandstanding by imposing a 90% tax on the bonuses.  Our first impulse might be satisfaction at assuring that this money is kept by the taxpayers, but this exorbitant tax is troubling on may fronts.  First, if we are going to use the tax code in such a punitive way, who will be next?  Second, this is the government's fault.  Whether you want to blame the Bush administration or the Obama administration, Henry Paulson or Timothy Geithner, you can't deny that this stemmed from shoddy planning.  There should have been language banning bonuses, but someone dropped the ball.  That is the government's problem.

     In light of the witch hunt that is ensuing, Barack Obama sees a golden opportunity to expand the government's reach into private industry.  This week, Obama plans to announce a plan tie corporate bonuses to performance, and that's not all:


One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving U.S. government bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.

     Linking bonuses to performance is a great idea, but it isn't something the government should be involved in deciding, unless the corporation received federal aid and the terms were clearly spelled out at the beginning.  Obviously, there are some who want to expand these regulations to all publicly traded companies, even those who did not receive assistance.  Deciding compensation should be decided by each company's board of directors and of course, the shareholders, who can wield a great deal of influence when properly organized.

     Just to summarize, Barack Obama is overseeing unprecedented spending, expansion of government, and wants to decide how much individuals should earn.  Karl Marx would be proud.


http://www.iht.com/articles/2009/03/22/america/22regulate.php